Bitcoin: between surges and plunges, a look back at a historic year

It took off on Wall Street, aroused the interest of big names in finance, was adopted as the official currency by El Salvador… The year 2021 was a record year for bitcoin. But what about 2022? Bitcoin has seen its price boosted this year by the appetite of traditional finance for this new type of investment, but cryptocurrency specialists are struggling to predict how this volatile sector will behave in 2022. After chaining records at the end of 2020 and at the beginning of the year, bitcoin seems to have lost some of its luster: between December and April, the cryptocurrency chained the highest historical highs, going from less than 20,000 dollars to more than 60,000 dollars.

A boosted performance, fueled by the interest of big names in new technologies and finance, who until then had kept away from this technology which has only existed since 2008. But since then, and despite a new record in October, the bitcoin continues its surges with equally spectacular plunges, and was evolving at the end of December at less than 50,000 dollars.

“The choppy and directionless price performance, which could translate into further decline in the short term, makes the market very uncertain,” admits Loukas Lagoudis of cryptocurrency investment fund ARK36. But “we expect the adoption of digital assets by institutional investors and their integration into the traditional financial system to further push the crypto market next year,” he said.

The regulator is watching

This is indeed what has boosted the price of bitcoin since the end of 2020: announcements related to cryptocurrencies have multiplied over the months, from the big names in traditional finance to those in new technologies. While El Salvador’s adoption of bitcoin as its official currency made an impression, investors focused on Wall Street’s appetite for cryptocurrency.

Bitcoin’s April high coincided with the IPO of cryptocurrency trading and shopping platform Coinbase, and the October high coincided with the regulator’s approval of index-linked products. bitcoins. Either way, cryptocurrency enthusiasts approve of what they see as signs that the market is settling down. The risk of regulatory action weighs indeed on the cryptocurrency, created in the wake of the financial crisis so as not to depend on central banks – and whose very high electricity consumption is often criticized.

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In China, the state banned cryptocurrency transactions at the end of September, and regulators in Europe and the United States are increasingly focusing on this decentralized network, which is very difficult to regulate. “There is never certainty when it comes to crypto, let alone regulation. But one thing is certain, the voices calling for more regulation of cryptocurrencies are going to be louder and louder,” warns Huong Hauduc , from the Bequant exchange platform.

Less marked dominance

So far, bitcoin’s criticisms aren’t stopping some of the world’s richest men from taking an interest in it. Tesla boss Elon Musk has regularly moved the market, notably by announcing that he has invested part of his group’s cash in bitcoin. More radical, Jack Dorsey left the direction of Twitter to focus on his digital payment company, Square, which he renamed Block and where he intends to develop his activities related to cryptocurrencies.

But bitcoin also risks competition from other cryptocurrencies. According to the specialized site CoinGecko, which lists more than 12,000 cryptocurrencies, this market represents 2.360 billion dollars, of which more than 900 billion for bitcoin alone. Its share has dwindled over the year, and as number 2, Ethereum, prepares to attempt to evolve its model, some are wondering if the decentralization that makes it virtually impossible for bitcoin to evolve will cause not his loss. “Bitcoin’s reluctance to change its model is, in our view, one of the characteristics that makes it stable and consistent, which is necessary for a real global currency”, answers however Frank Downing, analyst at ARK.

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